Govt blind to economic crisis : opposition

A financial crisis is looming over the country, threatening to rip into the real economy and affecting the lives of ordinary men and women, but government leaders seem to be in denial of the impending disaster, said several opposition members of parliament.

According to the DAP parliamentarians, instead of addressing the concerns of the people and coming up with concrete steps to stave off economic hardship, government leaders were more interested to jostle for political ground.

“The last time such a disaster happened was ten years. This suggests that instability is systemic to the free market system, which has been used by corporations to benefit themselves,” said DAP MP for Klang Charles Santiago

“Ultimately, the socialisation of risks means it is the ordinary man and woman who will pay for their mistakes. Social policies will now be placed on the back-burners of government plans if they’re not completely taken off the national budget,” he added.

The latest financial crisis striking across the US and Europe - dubbed the worst financial meltdown since the Great Depression - has seen the former announcing an unprecedented bailout package of US700 billion dollars for the financial sector and European policymakers making similar, though smaller-scaled pacakages.

In Asia, India, South Korea, Japan, Taiwan, Hong Kong and China have also put in place measures to deflect off the worst effects of the global financial crisis. Whilst in Singapore, the government has already declared a state of recession.

Yet in Malaysia, Finance Minister Najib Abdul Razak and Second Finance Minister Nor Mohamed Yakcob have recently issued reassurances the country was well buffered from the fast-spreading, incurring criticism from several quarters including Transparency International Malaysia.

Najib, who is also deputy prime minister, was reported to have said Malaysia’s economy was stable and several proactive measures would be announced soon to boost growth. He also said Malaysia enjoyed strong economic fundamentals, financial markets and infrastructure that would increase its resilience to any external shock.

“Such a response by Najib to the financial crisis - which will hit ordinary men and women in a very hard way - have not been helpful at all to assure us the government is dealing with the issues effectively, if at all,” Santiago said.

Possible Run On Banks

There is talk that as in other countries, retailers in Malaysia will be quickly decreasing orders in anticipation of the impending slump in demand, which will hit in turn hit major manufacturing exporters later this year.

There was also the possibility of a run on domestic banks, which are suffering from overseas investment losses. Tourist arrivals, commodity prices and manufacturing exports are also expected to be lower.

Santiago said the government was projecting a false picture of stability when Nor Mohamed recently said Malaysia’s diversified economy would save it from the global financial crisis. The second finance minister had said Malaysian exports accounted for only 30% of economic growth, a sizeable - and increasing - proportion of which went to China and India.

“Both India and China may import some our products in the form of product inputs, but they are also dependent on the US and European markets. If demands from the US and Europe markets reduce, then demands from India and China of our products will also decline,” said Santiago.

He also demanded that the government clarified how the 2009 Budget would be modified to reflect the sinking economic conditions.

Another DAP leader, Petaling Jaya Utara MP Tony Pua, said the global recession and lower oil prices would wreak “havoc” on the government's revenue and expenditure as project in the 2009 Budget.

“The more than 20% fall in crude oil prices will have a major impact on the Government's revenue... Without a any reduction in the government's planned record expenditure, this will mean a massive increase in the government's budget deficit to a precarious 5.4%, from its projected 3.6%,” said Pua in a statement.

Pua also called on Najib to table a revised budget in Parliament in light of the volatile economic circumstances.

“Najib must not only spew rhetoric about Malaysia's sound economic fundamentals and be in denial about the economic fallout which is about to hit us very hard, but instead take action and demonstrate his ability to soundly managing the country's financials to reassure investors and return the loss of confidence in Malaysia's economy.”